Amazon.com, Inc. ’s Prime service is getting bigger and the service could be a bigger threat to retailers, according to a report in Business Insider. The company’s Prime service has 60 million subscribers, including 41 million from the US, according to Morgan Stanley. The report in Business Insider suggested that the Prime service could be a real threat to retailers instead of the video streaming giant Netflix, Inc. . The report said that Prime members tend to buy more on Amazon.com compared to other retailers.
Why Amazon Not Threat To Netflix
The e-commerce giant is going to spend more money to boost its video content and original content in a bid to compete with Netflix. The company plans to double down on the content for the rest of the year. During its second quarter earnings call, the company’s CFO Brian Olsavsky said that Amazon will “nearly double” its investment in all types of video, while “tripling” the amount of the company’s original content, over the rest of the year, Business Insider reported.
However, it appears that Amazon.com, Inc. ‘s steaming service isn’t big threat to Netflix.
The latest data from Cowen & Co. shows that 66% of Prime members also have a Netflix membership. Those Prime users are also paying Netflix subscribers, and another 10% Prime members have access to the service one way or another.
“That means video-streaming may not be a zero-sum game, but rather a market where a mixture of standalone services coexist with each other,” the article reads.
Last week, Morgan Stanley said in a report that AMZN will inch closer to the $1,000 mark, thanks to Prime’s surging popularity. The firm told its clients that it’s time to buy even more shares in the online retail juggernaut.
According to Morgan Stanley, 40% of Prime members spend a minimum of $1,000 on Amazon every year. The e-commerce company understands how much of an impact Prime has on its revenues. This is why it keeps adding new features to get new subscribers and to keep old users satisfied.
“Amazon is just creating an incredible moat, because remember, Prime Video and Prime Music are add-ons, it’s part of the bundle which is also incredible,” Cowen & Co. analyst John Blackledge said in a conference call.
As we reported earlier, a majority of Wall Street analysts are bullish on Amazon. Even with the enormous gains the company has witnessed since 2011, nearly all analysts expect major gains. The likes of JPMorgan Chase and Co. and RBC Capital Markets forecast shares to hit $1,000 within the next 12 months.
The Prime membership service provides members with free shipping on qualifying orders, faster shipping times, unlimited movies streaming, unlimited music streaming, and access to audiobooks.
According to Consumer Intelligence Research Partners, Amazon.com, Inc. was able to increase its total US Prime membership by 19 million since July 2015. The report, released in the second quarter this year, showed that the online retailer has a total of 63 Prime members in the US, up from 44 million members since the end of the second quarter in 2015.